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DECISION

Approving the zoning Plan for exploration, mining, processing and use of bauxite ore in the 2007-2015 period with a vision to 2025 taken into consideration

THE PRIME MINISTER

Pursuant to the December 25, 2001 Law on Organization of the Government;

At the proposal of the Minister of Industry and Trade and the Minister of Planning and Investment,

DECIDES:

Article 1.- To approve the zoning plan for exploration, mining, processing and use of bauxite ore in the 2007-2015 period with a vision to 2025 taken into consideration as follows:

1. Viewpoints

a/ To develop the bauxite mining and processing industry in line with Vietnam's industrial development plan, local socio-economic development plans and plans on development of related infrastructures (transport, seaports, electricity and so on). To ensure that the exploration, mining and processing of bauxite is efficient, effective and environmental friendly and socio-economic development is combined with security and defense protection in bauxite ore areas, particularly the Central Highlands.

b/ To build and develop the bauxite mining and processing industry with modern and environmentally friendly technology. The principal form is that Vietnamese enterprises act as construction investors calling domestic and foreign partners to contribute equity capital, with the Vietnam Coal-Minerals Industries Group (for bauxite ore areas in the Central Highlands) holding dominant shares (more than 50%), so as to ensure proactivity and sustainable development and entry into world alumina and aluminum markets.

c/ To develop the alumina manufacture and aluminum refining industry in harmony with socio-economic development in the Central Highlands and related localities.

2. Development orientations

a/ The 2007-2015 period:

- To focus on building transport infrastructure, including a rail connecting the mining fields in Dak Nong and Lam Dong provinces with a seaport in Binh Thuan province;

- To intensify bauxite exploration and increase bauxite deposits in order to ensure reliability for mining activities;

- To exploit bauxite and produce alumina for export and supply of materials for domestic electrolysis of aluminum;

- To build an aluminum electrolysis plant to supply aluminum for domestic consumption and export.

b/ The 2016-2025 period:

- To make investment in order to increase the capacity of bauxite exploitation and alumina production for export and supply of materials for domestic electrolysis of aluminum;

- To invest in aluminum electrolysis plants (increasing output and/or building anew) in order to provide aluminum for domestic consumption and export.

c/ Orientations for cooperative investment: The major form of investment cooperation is joint-stock companies, in which the Vietnamese party holds dominant shares. Joint venture or wholly foreign owned investments are allowed only in the case of power-aluminum complexes using alumina produced in Vietnam.

3. Development targets

a/ On bauxite exploration: To boost exploration, ensuring reliable bauxite deposits for the sustainable development of the bauxite mining and processing industry nationwide.

b/ On mining and processing:

- To exploit bauxite and produce quality alumina for electrolysis. It is expected that alumina output by 2010 will be 0.7 - 1.0 million tons/year; 2015: 6.0 - 8.5 million tons/year; and 2025: 13 - 18 million tons/year. To export all alumina products before 2015. Alumina output will be used for domestic electrolysis of aluminum and export after 2015;

- To produce aluminum hydroxide for local consumption and export. The output is expected to reach about 0.65 million tons by 2010;

- To produce by electrolysis aluminum of international commercial standards. The output is expected to reach 0.2 - 0.4 million tons before 2015 and to increase according to market demand and power supply capacity;

- To produce by sorting and cleaning refined bauxite ore with the content of A1203 ³ 48% (for mines with limited deposits in northern and coastal areas).

c/ On environmental protection: Bauxite mining must be accompanied with restoration of arable land and protection of eco-environment in mining areas. Cultural and tourist heritages must be preserved.

4. Zoning

a/ Small and medium bauxite mining and processing areas: in Ha Giang, Cao Bang, Lang Son and central coastal provinces.

- Ha Giang area (disaspore bauxite mines are scattered and small in deposit).

- Cao Bang and Lang Son areas: mines are scattered and small in deposit.

- Central coast with Van Hoa and Quang Ngai bauxite mines (these two mines are scattered and small in deposit).

b/ Industrial bauxite mining and alumina production areas: Dak Nong, Bao Loc - Di Linh, KonpLon - Kanak and Phuoc Long areas (mines are concentrated and large in deposit).

c/ Areas where mining is prohibited or restricted: To be zoned off and approved by People's Committees of provinces and centrally run cities in collaboration with concerned ministries and branches.

d/ Areas where mining is put up for bidding: Pilot bidding of mining will be implemented in several small and medium bauxite mines in Ha Giang, Cao Bang, Lang Son and central coastal provinces in case many capable and experienced enterprises wish to participate in mining activities (except bauxite mines and mining spots already designated by the Prime Minister to other enterprises).

5. Bauxite exploration and mining planning

a/ Bauxite deposit: The total of bauxite deposits, identified and estimated, is about 5.5 billion tons, including about 91 million tons in the northern region, and about 5.4 billion tons in the southern region. Of the amount, identified deposits of grade 2 account 4.4 billion tons and estimated deposits 1 billion tons.

(For details, refer to Tables 1 and 2 of Appendix I).

b/ Exploration planning for the period 2007-2015:

- The Vietnam Coal-Minerals Industries Group will be responsible for exploring all bauxite mines in the Central Highlands (except for those already designated by the Prime Minister to other units) in order to estimate their deposits for use as a basis for preparing and implementing bauxite, alumina and aluminum investment projects.

- The Vietnam Coal-Minerals Industries Group and capable and experiences enterprises of all economic sectors will explore bauxite mines in Ha Giang, Cao Bang, Lang Son and central costal provinces (except those already designated by the Prime Minister to other investors).

Bauxite exploration projects in the 2007-2015 period are listed in Appendix II.

c/ Planning of bauxite exploration and processing in Ha Giang, Cao Bang, Lang Son and the central coast:

- Scope of investment: Small and medium for mines with limited deposits.

- Depending on market demand, investment capability and economic efficiency in each area, no limits are imposed on the output and kinds of products, including refined bauxite ore with the content of Al2O3 ³ 48%; aluminum hydroxide, alumina and other products processed from bauxite (including refined ore) for local consumption and export.

- Form of investment:

+ Capable and experienced enterprises of all economic sectors are encouraged to make investment;

+ Regarding alumina production, the principal form is domestic investment with foreign partners contributing equity capital and domestic enterprises holding dominant shares (more than 50%). For aluminum hydroxide and aluminum alloy production, investment cooperation with foreign partners may be considered.

d/ For the Bao Loc - Di Linh area: To exploit and process alumina and aluminum hydroxide.

- Aluminum Hydroxide Mill No. 1, with an expected capacity of 100,000 tons/year (the Southern Basic Chemicals Company as the investor). Bauxite will be exploited from the Nam Phuong and Thang Loi Hill mines;

- Aluminum Hydroxide Mill No. 2, with an expected capacity is 550,000 tons/year (the Vietnam Chemicals Corporation as the investor). The investment form is a joint venture aluminum hydroxide plant. The Vietnam Chemicals Corporation will be responsible for mining and supplying the mill with refined bauxite).

- The Tan Rai - Bao Loc Alumina Mill, with an expected capacity of 0.6 million tons/year by 2010 and 1.2 million tons beyond 2010. Bauxite ore for the mill will be exploited from the West Tan Rai and Tan Rai mines (the Vietnam Coal - Minerals Industries Group as the investor).

e/ For the KonpLong - Kanak area

The 2007 - 2015 period: To build an alumina mill of 1 - 1.5 million tons/year using bauxite exploited from the Mang Den and Kon Ha Nung mines. The mill will be located at the mine or in the Quang Ngai coastal area where the deep-water seaport Dung Quat is located.

f/ For the Dak Nong area

- The 2007-2015period:

The following alumina projects are planned to be built:

+ Dak Nong Alumina Mill 1 (the Nhan Co Alumina Joint Stock Company as the investor and the Vietnam Coal-Minerals Industries Group holding dominate shares), with a capacity of 0.3 million tons/year, which may be considered to be increased to 0.6 million tons/year. Bauxite will be exploited from the Nhan Co and nearby mines. The mill site is in Nhan Co area, Dak Nong province;

+ Dak Nong Alumina Project 2, with a capacity of 1.5 - 2 million tons/year. Bauxite will be exploited from the May 1 and nearby mines. The mill site is in Dak Nong province;

+ Dak Nong Alumina Mill 3, with a capacity of 1.5 - 2 million tons/year. Bauxite will be exploited from the Gia Nghia and nearby mines. The factory will be located in Dak Nong province;

+ Dak Nong Alumina Mill 4, with a capacity of 1.5 - 2 million tons/year. Bauxite will be exploited from the Tuy Duc, Dak Song and nearby mines. The factory will be located in Dak Nong province.

(All these projects will have the Vietnam Coal- Minerals Industries Group as the investor).

- The 2016-2025 period:

Depending on market demand, the following alumina projects are planned to be expanded:

+ Dak Nong Alumina Mill 1: Its capacity will be increased to 0.6 - 1.2 million tons/year, using bauxite from the Nhan Co and nearby mines;

+ Dak Nong Alumina Project 2: Its capacity will be increased to 3.0 - 4.0 million tons/year, using bauxite from the May 1 and nearby mines;

+ Dak Nong Alumina Mill 3: Its capacity will be increased to 3.0 - 4.0 million tons/year, using bauxite from the Gia Nghia and nearby mines;

+ Dak Nong Alumina Mill 4: Its capacity will be increased to 3.0 - 4.0 million tons/year, supplied with bauxite of the Tuy Duc, Dak Song and nearby mines.

g/ For the Binh Phuoc area

The 2016-2025 period: To invest in building an alumina mill of 1.0 - 1.5 million tons/year, using bauxite from mines in Binh Phuoc province. It will be located in Binh Phuoc.

For the list of bauxite processing projects in the period 2007-2025, see Appendix III, and for industrial-scale bauxite mines, see Appendix VII.

6. Outside transport planning

A rail route connecting the Central Highlands and the Binh Thuan seaport will be built on a 1,435 mm double track (during 2007-2015: single track and after 2015: double track). During 2007-2015, the route will run from Dak Nong through Lam Dong to the Binh Thuan seaport. After 2015, the railway will run to the Binh Phuoc Alumina Mill (depending on the time of putting this mill into operation) and the bauxite area in Cambodia (depending on the cooperation with other partners). Transport capacity in the first phase (by 2015) will be about 10.0 - 15.0 million tons/year and the second phase (by 2025), about 25.0 - 30.0 million tons/year.

7. Seaport planning

To build a specialized seaport in the Binh Thuan sea (at North Hon Gio or Hon Ke Ga) serving the development of the aluminum industry in the Central Highlands and the southern Central Vietnam. The port will be able to accommodate vessels of 30,000 - 50,000 tons. Its first-phase capacity (by 2015) will be about 10.0 - 15.0 million tons/year and second-phase capacity (by 2025), 25.0 - 30.0 million tons/year.

The specialized seaport's location at North Hon Gio or Hon Ke Ga will be considered and decided in accordance with the principle of harmony between industrial development and tourism development.

8. Planning of aluminum electrolysis mills

a/ The 2007-2015 period: To encourage foreign partners to enter into joint ventures to build power - aluminum electrolysis complexes in Vietnam. The capacity will be 200,000 - 400,000 tons of aluminum alloys/year. The sites of aluminum electrolysis mills may be in Dak Nong, Lam Dong, Binh Thuan (near the seaport), Quang Ninh and/or other areas within and outside Vietnam (in places where there is sufficient and stable supply of power at reasonable price).

b/ The 2016-2025 period: The existing mills' capacity may be expanded to 400,000 - 600,000 tons of aluminum alloys/year or new aluminum mills will be built with an annual capacity of 200,000 - 400,000 tons of aluminum alloys within or outside Vietnam (in places where there is sufficient and stable supply of power at reasonable price).

(The list of aluminum electrolysis projects is included in Appendix IV).

9. Planning of raw material factories

To make investment in building factories producing soda, lime, coal electrodes and other materials and raw materials which are of sizes suitable to the alumina and aluminum alloy production capacity in each period. The locations of the factories will be selected by investors in line with local socio-economic development planning.

10. Investment capital demand

Investment capital for the exploration, mining and processing of bauxite in the 2007-2025 period is estimated at VND 189,110 - 249,420 billion (equivalent to USD 11.8 - 15.6 billion), including bauxite mining and processing projects and infrastructure projects (railway and seaports), as reflected in Appendix VI.

The expected sources of investment capital are as follows:

- Geological exploration projects: VND 760 billion (equivalent to about USD 47.5 million) to be funded by enterprises themselves.

- Bauxite mining and processing (alumina production and aluminum electrolysis) projects: VND 158,450 - 218,760 billion (equivalent to USD 9.9 - 13.7 billion) to be funded with:

+ Equity capital of Vietnamese and international shareholders;

+ Loans from Vietnamese and foreign commercial banks. The Government will consider and provide guaranty for foreign loans;

+ Capital raised from the securities market and sale of project bonds.

- Infrastructure facilities: VND 29,900 billion (equivalent to USD 1.9 billion) to be funded with:

+ ODA loans;

+ State budget;

+ Capital contributions from enterprises;

+ Loans from Vietnamese and international commercial banks. The Government will consider and provide guaranty for foreign loans;

+ Capital raised from the securities market and sale of project bonds.

Article 2.- Organization of implementation

1. The Ministry of Industry and Trade shall publicize the approved plan, assume the prime responsibility for, and collaborate with provincial-level People's Committees in directing, according to their functions, the implementation of the plan into practice, regularly report on its implementation results, and, in the course of implementation, review and propose timely adjustments to the plan to the Government for approval.

2. The Ministry of Planning and Investment shall solicit and call for ODA capital and arrange funds for the preparation and implementation of infrastructure projects (railways and seaports).

3. The Ministry of Natural Resources and Environment shall work out plans for baseline surveys, and manage and preserve geological data relating to national bauxite deposits, consolidate the operation of the mine inspection system, raise the management and administration capacity and the legality of the inspection system from the central to local level, licensing and so on.

4. The Ministry of Transport shall assume the prime responsibility for making plans for investment in roads and seaports serving the development of the bauxite mining and processing industry in the Central Highlands as well as socio-economic development.

5. The Ministry of Finance shall study and develop financial mechanisms related to this plan's contents.

6. People's Committees of provinces and centrally run cities shall direct the performance of the following tasks:

a/ Intensifying protection of mineral resources, including minerals being exploited and not yet exploited in their localities;

b/ Intensifying supervision and inspection of mining establishment;

c/ Assuming the prime responsibility for, and coordinating with concerned agencies in reviewing, zoning off and approving areas where mining is prohibited or restricted in their localities.

7. The Vietnam Coal-Minerals Industries Group shall take the main responsibility for making investment to implement this plan in the Central Highlands.

Article 3.- This Decision takes effect 15 days after its publication in "CONG BAO."

Article 4.- Ministers, heads of ministerial-level agencies, heads of government-attached agencies and presidents of People's Committees of provinces and centrally run cities shall implement this Decision.